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Explaining cross-national variations in the prevalence of envelope wages: some lessons from a 2013 Eurobarometer survey

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  • Colin C. Williams
Abstract
The aim of this article is to evaluate competing theories that variously explain the greater prevalence of envelope wages in some countries either as: a legacy of under-development (modernisation thesis); due to high taxes, state corruption and burdensome regulations and controls (neo-liberal thesis), or a result of inadequate state intervention in work and welfare arrangements, which leaves workers less than fully protected (political economy thesis). Reporting a 2013 survey of cross-national variations in the prevalence of envelope wages, the finding is that the results refute the neo-liberal thesis but support both the modernisation and political economy theses, revealing that this illegitimate wage practice is more common in poorer, less equal countries with lower taxation and social protection levels and less effective redistribution via social transfers. The theoretical and policy implications are then discussed.

Suggested Citation

  • Colin C. Williams, 2014. "Explaining cross-national variations in the prevalence of envelope wages: some lessons from a 2013 Eurobarometer survey," Industrial Relations Journal, Wiley Blackwell, vol. 45(6), pages 524-542, November.
    • Handle: RePEc:bla:indrel:v:45:y:2014:i:6:p:524-542
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    File URL: http://hdl.handle.net/10.1111/irj.12077
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    References listed on IDEAS

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    1. Andreas Buehn & Friedrich Schneider, 2012. "Shadow economies around the world: novel insights, accepted knowledge, and new estimates," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(1), pages 139-171, February.
    2. Ted London & Stuart L Hart, 2004. "Reinventing strategies for emerging markets: beyond the transnational model," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(5), pages 350-370, September.
    3. John Round & Colin C. Williams & Peter Rodgers, 2008. "Corruption in the post-Soviet workplace: the experiences of recent graduates in contemporary Ukraine," Work, Employment & Society, British Sociological Association, vol. 22(1), pages 149-166, March.
    4. Colin. C. Williams, 2008. "Illegitimate wage practices in Eastern Europe: - The case of 'envelope wages'," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 13(3), pages 253-270.
    5. Colin Williams, 2008. "Envelope wages in Central and Eastern Europe and the EU," Post-Communist Economies, Taylor & Francis Journals, vol. 20(3), pages 363-376.
    6. Jaanika Meriküll & Karsten Staehr, 2010. "Unreported Employment and Envelope Wages in Mid-Transition: Comparing Developments and Causes in the Baltic Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 52(4), pages 637-670, December.
    7. Rainer Neef, 2002. "Aspects of the Informal Economy in a Transforming Country: The Case of Romania," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 26(2), pages 299-322, June.
    8. Olumide TAIWO, 2013. "Employment choice and mobility in multi-sector labour markets: Theoretical model and evidence from Ghana," International Labour Review, International Labour Organization, vol. 152(3-4), pages 469-492, December.
    9. Colin C. Williams, 2013. "Evaluating cross-national variations in the extent and nature of informal employment in the European Union," Industrial Relations Journal, Wiley Blackwell, vol. 44(5-6), pages 479-494, November.
    10. Colin C. Williams, 2009. "The Commonality of Envelope Wages in Eastern European Economies," Eastern European Economics, Taylor & Francis Journals, vol. 47(2), pages 37-52, March.
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    Cited by:

    1. Di Nola Alessandro & Kocharkov Georgi & Vasilev Aleksandar, 2019. "Envelope wages, hidden production and labor productivity," The B.E. Journal of Macroeconomics, De Gruyter, vol. 19(2), pages 1-30, June.
    2. Colin C. Williams & Ioana A. Horodnic, 2015. "Explaining and tackling the shadow economy in Estonia, Latvia and Lithuania: a tax morale approach," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 15(2), pages 81-98.
    3. Colin C Williams & Ioana A Horodnic, 2016. "Tackling the undeclared economy in the European Union: an evaluation of the tax morale approach," Industrial Relations Journal, Wiley Blackwell, vol. 47(4), pages 322-340, July.
    4. Colin C. Williams, 2023. "A Modern Guide to the Informal Economy," Books, Edward Elgar Publishing, number 18668.
    5. Colin C. Williams & Ioana A. Horodnic, 2017. "Evaluating the Illegal Employer Practice of Under-Reporting Employees’ Salaries," British Journal of Industrial Relations, London School of Economics, vol. 55(1), pages 83-111, March.
    6. Ian Clark & Trevor Colling, 2018. "Work in Britain's Informal Economy: Learning from Road†Side Hand Car Washes," British Journal of Industrial Relations, London School of Economics, vol. 56(2), pages 320-341, June.

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